As the economic reforms got under way, a number of coastal towns gained the right to seek foreign investment subject to Beijing's approval, and began to make ambitious plans. They became known and admired for their entrepreneurial talents. I decided to visit Wenzhou - which had become famous as the `button capital' (it had cornered the national market) - on the Zhejiang coast. The best approach was by local bus over the hills from the nearest railway 250 kilometres away. In the main square of Jinhua, waiting for the bus, I watched a troupe of qigong (martial arts) performers smashing bricks on one another's chests. A story teller narrated episodes from the Dream of the Red Chamber for a small fee. A notice promised a `public execution rally' later that week. Arrving in Wenzhou at dark, my eye was first caught by the neon cross of a recently re-opened church. Traditional shops with wooden shutters sold imported electronic goods. China was certauinly on the move.

Opposite the public library in Tianjin, China's third largest city, there used to be a pleasant little park with a statue of the famous writer Lu Xun looking wisely down. Lu Xun is still there but he is hemmed in by intruders. The park has been completely obliterated. Small brick huts - earthquake shelters - have filled the space. Smoke from their coal brickette stoves fills the hazy morning air.

It will soon be exactly four years since the great earthquake of 28 July 1976 hit north China, destroying Tangshan and casuing great damage in Tianjin. Thousands of linjian - literally `temporary dwellings' - still line the streets and riverside under what looks like fairly permanent occupation. There must be eight or nine hundred alone one side of the Huai river waterfront, opposite Central Square. The bricks which are used, loosely piled up with a bit of mortar here and there, were salvaged by houses brought down by the earthquake, so that they look already elderly. Where there is a lamppost or a roadside tree, the linjian is simply built around it. Roofing felt keeps the hut dry, anchored down by loose bricks, windows are filled with paper or chicken wire at best.

It is a measure of China's human condition and the magnitude of the economic tasks facing the post-Mao leadership that the country's third largest city should still be struggling with this problem. Earlier this year Chairman Hua Guofeng visited Tianjin and even in the sanitized words of the New China News Agency had something critical to say. `He said Tianjin was an affected area of the Tangshan earthquake,' the Agency reported. `The damage was fairly heavy. It was necessary to make conscientious efforts to rebuild houses for the residents.' He had been preceded by Vice-Premier Deng Xiaoping whose much sharper words had not been reported at all by the official media..

Incongruously still standing and mostly in good repair are the Doric, Corinthian and Ionic facades of the foreign banks and businesses which once dominated the city. A walk down Liberation (ex `Victoria') Road to the Liberation (ex `French') Bridge across the river takes one straight back to semi-colonial China when Tianjin (Tientsin) was divided into nine separate foreign concessions. But there is something wrong with the scale. Liberation or Victoria Road was always too narrow for the pretensions of its expatriate bankers and traders, perhaps pining for the more spacious Bund of the waterfront in Shanghai. The colonnades are out of proportion to the very ordinary street below. All squeezed up together, it is the architectural Legoland of mercantile capitalism.

The silver cutlery in the Edwardian depths of the Tianjin Hotel bears the original name - Astor House Hotel. I don't believe the official guide's claim that there was once a notice on the park opposite (Middle Gardens) which read `Chinese and Dogs do not Enter'. But I can believe that there was once, in the words of a European ex-resident, `a splendid brothel at the hotel.' The rooms are discreetly panelled and the baths are three foot wide. Traffic is sparse and mostly official - buses, jeeps and taxis - on Liberation Road. A hundred yards to the north and running parallel but winding away to the People's Park is the much more popular Dagu Road. Brick shelters have infilled its narrow pavements. At the seven o'clock morning rushhour it is clogged with bicycles, for it is a Chinese street just as Liberation Road in spite of the new name still belongs to a foreign past.

Tianjin together with Beijing and Shanghai form a separate category of `directly administered cities' which are on the same level as Chinese provinces. In recent years Tianjin has absorbed several neighbourhood country districts, and half the population of more than seven million work on the land. The city's authority extends to the Dagang oilfield 60 miles away. There are three main harbours and under new regulations Tianjin, like its two sister cities, will be able to transact foreign trade directly with the outside world bypassing the central government ministries in Beijing.

Textiles are a major export, and there is a wide range of light industry products going abroad, plus the usual oddments - local handicrafts, musical instruments, medicine and ginseng extract. I even discovered a local version of chocolate `Smarties'. Japanese tourists are beginning to arrive by chartered liner, and new hotels are being built, but Tianjin in spite of its status is still much more typical of urban life elsewhere in China than Beijing or Shanghai, and so far less exposed to glossy foreign adverts and electronic goodies in the shops. Halfway up Liberation Road stands the impressive building, once the officers of the British-owned Kailuan Mining Company, of the Municipal Communist Party Committee. As the trolley goes round the back, I glimpse over the wall a good number of black Mercedes and other superior cars, with the usual chintz curtains to preserve the passenger from public gaze.

What are the real obstacles to the sort of total transformation of the environment needed by Tianjin and by hundreds of smaller Chinese cities? The `leadership' points quite reasonably to the size of the problem and the lack of spare funds. The people - and this is partly a general mood in a more cynical post-Mao atmosphere - point to the `leadership' and its privileges.

Last year Tianjin set a target for house construction of three million square metres. They achieved two million and called it a victory. A cartoon in the local newspaper shows the Chinese character for Happiness, each stroke forming a block in a new housing estate. But the municipality never admitted failure to complete the original target.

The Tianjin Daily reports that there are three campaigns under way. One is to eliminate the Three Wastes of effluent, smoke and unwanted by-products which are acknowledged to cause serious pollution. Another records fresh successes in the struggle to reduce the rate of population increase. The annual natural growth rate has come down, fairly marginally, from 9.16 to 8.66 per thousand. Six hundred representatives of Advanced Units (family planning is organized at the place of work) have received silk pennants from the municipal Party.

The other campaign is to elect local delegates to city district People's Councils - the first election of any kind for fifteen years. Each local residents' section is divided into a number of `slices.' The candidates are supposed to go around and introduce themselves to each slice, and there is an elaborate law to ensure that there are more candidates than places.

But across the river by two-sent ferry in the old Russian Concession, street posters warn of more practical concerns. No one must build any new temporary building (each bears a license plate and has been inspected by the housing department). And the temporary dwellers are warned by a graphic picture to keep their stove pipes clean and avoid asphyxiation.

A well-established clock shop in the Beijing shopping street of Xidan, which has everything from cheap Shanghai watches to grandfathers in lacquered wood, has since my last visit started selling refrigerators as well. The `Snow Flower' brand costs 630 yuan (about 200 pounds and equivalent to ten months of an office worker's wage).

The fridge can only be purchased with foreign exchange certificates or `funny money' - worth about 60 per cent more on the black market - but there are plenty of interested customers. With the same currency one can buy Japanese fishing rods in the clock shop, and even Japanese hooks at five cents each. On the pavement outside the barrow-boys are selling gaberdine trousers at twenty-eight yuan (eight pounds) a pair. They affect a brushed-back hair style and wear black baseball caps, looking altogether sharper and more successful at avoiding the police than the itinerant salesmen of patent needle threaders and magic stain removers. Young women out shopping try on the trousers, over the pair they are already wearing, for a very approximate size.

Can this really be capitalism, as forecast recently in the foreign press when Deng Xiaoping announced his plans for urban economic reform? Whatever it is, trousers are no trivial matter. The old Chinese concept that trousers should be `worn for three years as new, for three more as old, and then another three as patched-up,' is completely out of date. Now a taxi-driver proudly tells me when I ask what is new - that `there are no patched trousers in Beijing.'

It is still a modest enough advance for China's capital city, but the change in life-style has acquired an irreversible confidence in the past year or so. Beijing's northern austerity (so forbidding to some foreign visitors although probably more Chinese than the softness of the southern provinces) has begun to fray. The native visitors from the interior Chinese provinces, who now go shopping not just for little parcels of shoes and sweets but for big items like TV sets, also take home the contagious impression that it is right to spend (although of course no longer right to make revolution).

In the words of the recent Central Committee resolution on economic reform they are helping `to smash blockades and open doors' between the more and the less developed areas and between the cities and the countryside. Young intellectuals who grew up during the Cultural Revolution may have mixed feelings about the new mood of acquisitiveness, and there are some fears that it may provoke a repressive back-lash. But they recognize that the aim of the reforms in planning and management is not to demolish a set of socialist relations of production (which have never existed in Chinese industry) but to weaken a system of bureaucratic patronage and influence which creates enormous delays and has much more in common with feudalism than socialism.

`I sit in the office and see people from factories all over China pleading for permission to import machine tools,' says one young cadre. `Next year they will be able to make their own contracts directly.'

Ideas and stimuli from the outside world already circulate much more widely at all levels, including that of the shoppers in Xidan. Democracy Wall, at the corner with the Avenue of Everlasting Peace, has been turned into a set of glass display cases which at the moment contain a series of models illustrating advanced computer technology.

In a theatre on the opposite corner, the amateur drama group of the China Mining Corporation is staging The Mousetrap in translation. And an expanding range of popular magazines with titles like Healthy Life and Young People on sale at the nearby bookstall conveys a mass of new information. The `white revolution' has just started to reach China, says an article in the bimonthly Knowledge and Living. More than sixty domestic electrical appliances are now produced by Chinese industry, though this is nothing compared to Japan or the US.

The People's Daily has devoted a lot of space recently to meet internal party criticisms of the open door policy. Like the Central Committee's resolution on urban reform, the argument is presented as a defence of real socialism against obscurantist opposition, and although it is a one-sided case it does merit serious reading. When the two superpowers locked the doors to China from the outside, it argues, the Chinese were forced in desperation to rely on their own resources. But socialism should be an open society, not a closed one. nor should socialism be afraid to learn from capitalism, whose `highly developed social production is precisely the necessary material condition for a socialist society.'

To fear the outside world, say the Party reformers, is not only narrow-minded nationalism but has a strong flavour of feudalism, which has always shunned new ideas and commodities that might break open its spiritual and material domain. of course some harmful things will be blown through the open door. but one can always install air filters, and it is better to have to wash one's face occasionally than to live in an airtight vacuum.

A visit to the China Art Gallery in Beijing to see the 1984 exhibition of national art reveals just how far the atmosphere has already been transformed. Suddenly and excitingly young Chinese artists have discovered a new idiom which matches the new times - and without official censorship. There are no more vacuous oils of labour models, or black-and-white woodcuts of long-cliched revolutionary themes. Even when the subject is a familiar one - peasants setting out for the fields - the treatment is quite different. Their figures are slightly grotesque, their hill-top village perched at a crazy angle. A building site is seen through a window, but the workers are remote and a huge vase of flowers dominates the windowsill. The new art has a strong sense of bright colour and bolt technique. Lacquer is the most popular medium for painting. There are tiles, mosaics, wall pictures, stone reliefs and some sculpture which has somehow shaken free of the public park idiom.

Meanwhile the unofficial `Spark' group of artists, once linked to the Democracy Movement, exhibit their pictures in a public park. Five years ago they did this as a political protest. Now the pictures are all for sale at very healthy prices. It is unlikely that anyone will object - has not the Party resolution said that intellectuals should place a higher value on their services?

Back on Xidan, the Edgware Road of Beijing (it is a mile and a half west of Wangfujing which is often compared with Oxford Street) it is 11 o'clock and already time for lunch. I am reminded that apart from the get-rich quick operators in the new economic zones, and the officials who have always had their privileges, and now hope for more, most people enjoy very simple pleasures. While we continue our very necessary discussion on which sorts of economic policies are compatible with a transitional socialist society, we should perhaps not be too hard on them for wanting some of the goodies we take for granted.

The Hunan restaurant, which specializes in the province's spicy southern cuisine, is already crowded. With shopping packages piled high on the table, people drink beer and wait patiently for very slow service, cigarette smoke rising in the sunrays which shine down from a central skylight.

It is very long way from the prix fixe at Maxim's where top cadres now like to be taken by foreign businessmen, although ordinary people are spending more on their food and eating more meat. Small sums of money still mean a lot, and there is a complicated system of twenty cents deposit on the beer bottle in case you walk off with it. But the open door policy has produced an expensive new air conditioner for the restaurant. It is sitting in its niche on the wall, just waiting to be wired up.

In the shadow of a banyan tree and next to a tower from the Song dynasty, the old British Consulate at Wenzhou awaits another foreign invasion. For Wenzhou is one of China's fourteen new `open ports.' The present plan is to build an international tourist village, with cabins in various national styles, on the island of Jiangxin - just opposite Wenzhou where the British once enjoyed the fresh air and supervized the collection of the Imperial Maritime Customs. There will also be a cable car and an amusement park with video games. The customs duties were mostly mortgaged to foreign bankers when Wenzhou was a Treaty Port - first conceded in 1858 during the Second Opium War. Now Wenzhou is again in the market for foreign funds, and a British company - Cluff Investment and Trading - has become its exclusive trading and investment agent. The central government in Beijing now counts for much more than it did in the treaty port days. The initiative to throw open Wenzhou came from Beijing in April 1984, after 35 years of isolation. The port had been deprived of investment before because it was in the strategic `frontline' facing Taiwan, and had been largely closed to foreigners.

But the other face of being backed by `The Centre' (as everyone calls Beijing) is that Wenzhou now depends on the government line remaining constant. `The foreigners' biggest worry,' admits a local intermediary, `is that the policies may change.' Recent official concern and confusion over the size of this year's trade deficit, the reassertion of central controls over all foreign contracts, and new restrictions on television and other consumer imports, do not help the climate. Earlier this year the state councillor Mr Gu Mu, who oversees the open-port policy, cut back plans for all except four of the 14, just as Wenzhou was getting under way.

Wenzhou officials insist that nothing has changed. But in spite of the fish and`the timber and the rare minerals (who has heard of alunite?) and the tourist potential. the city is eleventh in the league table of existing development out of the fourteen. It is a real test for the open door. `Completely virginal but ludicrously inaccessible,' was one foreign businessman's recent description of Wenzhou. The place buzzes with buying and selling but the goods are mostly Chinese and there is still an air of innocence. No one asks for foreign exchange certificates [a special kind of Chinese currency which foreigners used and which had a black market value], and the rickshaw cyclists are puzzled to be paid in them.

The shops on Liberation Street have wooden boarded fronts with lattice carving above, and offer a chronological jumble of commerce. Many kinds of dried fish in enormous baskets, bamboo carrying poles and furniture, carpenters' tools, Chinese medicine in porcelain jars ... But also rows of blue jeans, many shoe shops (platform heels for men are the thing), stylish hairdressers, racks of T-shirts stencilled with messages their wearers cannot understand (including `British Airways' and `Hello - good sailing'). Noodle and dumpling stalls until late at night, fruit-sellers who will peel your own Tianjin pear, and at least one dog-meat restaurant.

Mr Gu Mu's second thoughts meant that ten out of the fourteen ports were told to concentrate on building a better infrastructure, particularly in energy and transport communications, before plunging into new technology and industry. Beijing also took back its authority to approve or disallow any foreign investments over five million yuan in value. Higher limits were allowed only for Shanghai, Tianjin, Dalian and Guangzhou.

It is a leisurely day and night journey by steamer from Shanghai to Wenzhou, or a hard day's drive from Fuzhou in the south or Hangzhou to the north. But local officials recall how Dr Sun Yat-Sen, father of the Chinese republic, once designated Wenzhou as `The Great Harbour of the East.' They echo Dr Sun's grandiose railway schemes with their own plan to link Wenzhou to the nearest line inland. It looks nothing on the map - a mere 250 kilometres - but it must be engineered along steep river banks and will include thirteen kilometres of bridges. Beijing should pay for one third, the province may pay for another third, and the rest will be funded locally. Peasant communities along the line will be urged to contribute cheap labour, in return for shares in the railway's future success.

The new airport sounds further ahead, and is officially scheduled for completion by the end of next year. Wenzhou will pay for three-quarters and Beijing for the rest (the province again sounds doubtful). It will take everything, they say proudly, except the jumbo jet. There will be many meetings and bargaining, from the rural township through Wenzhou to its inland neighbours, on to the province and finally Beijing. According to one account Beijing has set a ceiling of thirty million US dollars a year for the next three years, which is clearly not enough. Wenzhou is still arguing with the national airline over who will run services from the new airport. Dividing up costs along the railway line is also contentious. Wenzhou's exclusive foreign agent is Cluff Investment and Trading Ltd., a subsidiary of Cluff Oil plc which has so far concentrated without much success on offshore exploration for Chinese oil. Its director, Mr David Tang, says now that the way to do business in China is `not to think big, but to think small.'

Someone who thinks big in Wenzhou is an officially approved rich peasant, Mr Zheng Shize, who has invested 5,250 pounds in a scheme to purchase a Chinese-made airship for carrying tourists to the mountain resort of Wandangshan. Tourist villages are planned here too, in an area described as famous for its `queer peaks and singular crags.' The less exotic hills closer to Wenzhou upstream on both sides of the Wenzhou river are beautiful enough. Felled timber from their slopes is lashed together in vast formations like the backbone of a long narrow fish and floated downstream.

On a wall on the outskirts of Wenzhou, a different sort of quotation says, simply, `Time is money.' Wenzhou's most successful business is based on lots of people thinking small but all the time about buying and selling. One quarter of the working population is self-employed, dealing in food, clothing and household goods from all over China. Everyone coming off the ferries from the Ou river brings something to sell in town. National leaders have come visiting to look at the `Wenzhou Model' of economic activity (a wholesale button market is especially praised).

But buttons by themselves will not generate the volume of economic activity which would justify the ambitious plans of Wenzhou's new city-funded development corporation. The airport will be embarrassingly empty, the new port under-used, and the railway will fail to pay dividends to the peasants who have given their labour, unless China can afford a second stage of industrial development, or foreign capital can be persuaded to take the risk. Only tourism will easily succeed at first, with the danger that - as has already happened further south in Xiamen - a peaceful and uncorrupted environment will be destroyed.

The Chinese cadre at the banquet table does not respond when I mention the name of Tony Benn, MP for Chesterfield - which happens to be twinned with one of the biggest coalmining towns in Shanxi province. I am making one of those elaborate statements which foreigners in China always make and which always misfire. My point is that Shanxi may have socialism in common with its British twins (the provincial capital of Taiyuan is also twinned with Newcastle and the province as a whole with Derbyshire) as well as coal.

Socialism could actually be a very interesting topic of conversation in Shanxi, but people want to talk instead about `opening up,' modernizing, this month's symposium in Taiyuan on international economic cooperation,' and generally on how to escape from the trap of being a resource-rich but landlocked province in Middle China. Middle China belongs neither to the fast developing coastal regions nor to the exotic but visibly backward provinces of the far west. It is a North-South wedge, starting from Shanxi, which roughly follows a secondary rail system from Taiyuan down to Nanning near the Vietnamese border in the south. It is in the middle as in `Middle Kingdom' (still the Chinese name for China - Zhongguo).

Shanxi was where the emperor Yu is supposed to have tamed the floods which created its fertile alluvial plain - really a plateau bounded to the north by desert, to the east by mountains and to the south and west by the Yellow River. History easily becomes para-history in China. The Emperor Yu is assigned an exact date (2205 BC), just as a cypress tree in the Jinci Temple grounds near Taiyuan is said to be 3,000 years old. Taiyuan is indeed a very ancient province. It contains 70 per cent of all buildings surviving in China from the Song Dynasty (7th to 9th centuries AD), and before. It has mountain-side monasteries, pagodas and dagobas, wooden towers and pavilions, buddhist stone carvings and frescoes, to match anywhere else in China. Yet Shanxi attracts only about 30,000 tourists a year - less than Tibet. Half of those only visit the northern city of Datong, famous for the Yungang stone grottoes and a factory which builds steam engines. Most of the 800,000 tourists to China by-pass Middle China.

Shanxi's coal industry illustrates both the potential and the basic problem of a region which still largely walks in the Maoist style on two legs - one stepping far ahead of the other. Roughly a quarter of this year's expected 220 million tons of coal comes from seven large nationally-owned mines, where coal extraction is 80 per cent mechanized. Another quarter is produced in local state mines, at the province, city or prefecture level. The rest is mined by collective units - small-scale county or village operations - and these days even by individual private enterprise. On a hillside road coated with mud near Yangquan (the city which is twinned with Chesterfield) I counted four coal lorries and trailers which evidently in the last hour of heavy rain had either jack-knifed or slid into the ditch. Provincial officials duck questions about accident rates. `Our coal reserves are widely scattered,' says Mr Ma Chaoliang of the Shanxi Mining Bureau. `We cannot afford much new equipment, so we encourage farmers to open coal mines.'

Meanwhile an entirely separate operation is being financed by Mr Armand Hammer, the American entrepreneur who has diversified from the Soviet Union to China. His Occidental Petroleum Company is a leading investor in the Pingshuo open-cast mine which starts production soon with an annual capacity of 15 million tons and plans eventually to triple its size. But at the Shanxi Mining Bureau they know nothing about Pingshuo. `It is handled entirely from Beijing.'

It is a safe assumption that Shanxi is hampered by political as well as economic backwardness. It is one of the few places in China where one sees official slogans about combatting `bourgeois liberalism.' The national vogue for economic decentralization can easily be subverted by bureaucrats who build their own separate kingdoms. The provincial capital seems powerless to deal with the Chemical Fertilizer Company, where the streams are blue with effluent and which on a sunny summer day is masked by nauseous smog.

Some of the most important conservative figures nationally active in trying to throttle back the demand for political reform belong to the `Shanxi clique,' headed by 84-year-old Politburo member Peng Zhen. Bo Yibo, 79, has recently been coopted by Deng Xiaoping into the new moderate reformist leadership which emerged this summer after the resignation of Hu Yaobang as Party Secretary-General. Mr Bo is Shanxi's patron in Beijing, and has secured national investment to build new railways and diversify heavy industry. The goal is to make Shanxi a `multi-energy base', processing more of its coal before export, and expanding steel and electricity production. But reform for Mr Bo seems mostly limited to the economic side.

On a billboard in the centre of Taiyuan, the citizens are instructed on how to behave: `Talk of ideals, love the motherland, warmly love Taiyuan, build up Taiyuan, create Taiyuan man of a new age, but do nothing to harm our national character'. Everyday Shanxi life is on a much lower plane. Young people with a chance to do so dream of going abroad to study. For others, there is modern dancing on the top floor of the biggest hotel, with revolving lights and a heavy but restrained rhythm.

Three thousand people recently packed into a concert at the Workers' Stadium. There was some slinky dancing and Hong Kong-style sentimental songs. The usherettes were police, to ensure that New Taiyuan Man behaved himself. For older people, there is the revival of the local Shanxi opera, with open-air stages in most villages. Young performers in their twenties, trained by the Cultural Bureau, have re-learnt the art of expressing emotion through shaking sleeves, stroking beards and waggling amazingly long feathers in their head-dresses.